Business is often a world of lateral consequences. For instance, imagine a chain of department stores has announced a massive in-store-only furniture sale. Big lines form outside each store before the doors open on the first day – and depending on the weather, third-party salespeople with contactless card-readers work the lines, selling sunblock or umbrellas, cold sodas or hot coffee. What started as an occasion for the business to sell a couch at 75% off has also become an opportunity for other people to make good margins at high volume on lemonade.
Smart consumer appliances are another case in point. They are each designed to meet a range of needs – but their presence in the home creates the circumstances for new ways of thinking about business.
A typical household has about ten such products, manufactured by five different companies. These devices don’t talk to one another, and don’t share information. The benefits they bring are unique to themselves, but if they were aggregated, the whole could be greater than the sum of these parts, for manufacturers and consumers alike. It would represent the next stage in the evolution of the Internet of Things (IoT).
A new business model
The new commercial prospect here is much more than a lemonade sales opportunity: it’s an entirely new business model. Instead of competing, consumer appliance manufacturers can collaborate with one another and with others, sharing information to their mutual advantage and to the benefit of the customers they have in common. The devices may log their own data, but inter-connectedness via the cloud enables aggregation and hence more insightful analysis. Eventually, the inter-operability of connected products will result in the ability to offer a better customer experience.
For instance, Capgemini Invent, Capgemini’s new digital innovation, consulting and transformation global business line, has been working with a major grocery business operating across around 3,000 locations globally to help the retailer become a digital brand, both online and in-store.
Fahrenheit 212, the innovation arm of Capgemini Invent, worked with the company to explore, design and prototype mobile in-store experiences around shopping, saving, cooking, list-as-path, fuel point incentives, personal price and health & wellness initiatives. These efforts enabled the retailer to provide apps that log and draw upon data from several sources to make life easier for customers.
An app such as this will be able to ask the shopper’s fridge to check its own contents, and report back. Armed with this knowledge, the app will then generate a shopping list of the missing ingredients, and inform the customer. ‘Here you go. Would you like to buy those things for yourself? Or would you like me to order them online for you now? I can have them delivered to you after you get home, in time for you to start cooking.’ To make good on this, the app will be inter-operable with a shopping portal or another device.
The same logic can apply in offices, hotels, and other large buildings. Here’s a further case in point: we’re also working with a manufacturer of coffee machines that can log my preferences, and remember them for next time. What’s more, because that information is stored in the cloud, it can be shared with other coffee machines throughout the office building – so no matter where I am on the premises, I can get a drink the way I like it, and without any hassle.
In short, what we’re seeing here from our own close collaboration with our clients for product engineering, are signs of what seems to be broader trend: it’s a move from a competitive product selling mindset to increasingly collective, service-based thinking. This changes the way products need to be designed and engineered, and it also changes the partner ecosystem for connected products.
Indeed, some industry analysts have observed that the traditional product development process is no longer sufficient. Instead, they say, companies should iterate rapidly, collaborate broadly, and be feedback-driven. This will keep businesses closer to their customers, and enable them to meet their needs faster and more comprehensively.
If we accept that the service is more important than the product, it’s a relatively small intuitive step to move away from the very principle of ownership. After all, when an appliance becomes a vehicle that delivers the service to the consumer, there is less need for the consumer actually to possess it – any more than I need to own a cab that gives me a ride home. We’ll expand on this soon, in another article.
That’s why a subscription business model is likely to grow alongside the collaborative one I just described. We’re seeing appliance, network service providers, and apps developers increasingly providing bundled subscriptions, sharing ownership of customer data to deliver their services. That ownership will, of course, need to be regulated and protected – but the net result ought to be an arrangement from which everyone benefits.
Smart appliances, high-speed connectivity, savvy apps, and cloud computing aren’t just changing customer service – they’re changing the way business operates. For our clients, and for us too here at Capgemini, these are interesting and exciting times.